Borders, the bookstore at The Shops at Ithaca Mall, will close by the end of April after the store’s parent company, Borders Group Inc., announced on Wednesday that it will file for Chapter 11 bankruptcy.
According to Mary Davis, spokesperson for Borders Group, the Ithaca store is closing under the Chapter 11 reorganization because it is “under-performing” relative to other Borders stores nationwide. In addition to the Ithaca store, which opened in 2002, more than 200 Borders stores across the country are expected to close, Davis added.
Davis said the company is discussing “various scenarios” for the Ithaca store’s 33 employees, but she declined to comment further.
In statements posted on Borders Group’s website, executives said the company does not have the capital resources it needs to be a viable competitor in the book industry “in light of the environment of curtailed customer spending … and the company’s lack of liquidity.”
Borders Group’s financial problems are the result of outstanding debts owed to publishers and other vendors, the company said. However, after reorganization, Borders executives said they expect to pay all vendors “in full under normal terms for invoices for goods and services provided after the filing date of Feb. 16.”
After reorganization, Borders Group’s will still face competition from rival Barnes & Noble Inc., the parent company of Ithaca’s only remaining bookstore chain.
On Feb. 10, Ithaca’s last independent new bookstore, Buffalo Street Books, announced it would close in March. Gary Weisbrott, Buffalo Street Books’ owner, said Borders’ closing “has very little impact on … other independent bookstores.”
“Everyone in the industry, and even outside of the industry, saw it coming,” Weisbrott said. “Borders has been on the ropes for a long time.”
Borders Group said it has received a commitment of $505 million in “debtor-in-possession financing” from GE Capital’s Restructuring Fiance division, which should allow it to repay its debts.
According to the Chapter 11 filing, Borders had $1.28 billion in assets and $1.29 billion in debts as of Dec. 25.
Until the stores close, Borders will honor its Borders Rewards program, gift cards and other customer programs, the company stated in press releases. Borders Group said it also expects to make retail employee payroll and continue employee benefits programs.
Original Author: Liz Camuti